Daily Brief Health Care: Max Healthcare Institute, ADICON Holdings Limited, Ergomed Plc, Incyte Corp and more

• Max Healthcare Institute (MAXHEALT IN) reported improved occupancies, revenues, EBITDA and other operating and financial parameters in Q3FY23 versus year-ago period.   
• The company recorded highest-ever EBITDA – both in terms of absolute value and margins, EBITDA per bed, ARPOB, and ROCE for the third consecutive quarter in FY23.
• During the last three-year, Max had revenue and EBITDA CAGR of 12% and 59%, respectively. Consensus expects the company to report double-digit revenue and EPS growth through FY25.

• ADICON Holdings Limited (ADI HK) is pre-marketing an HKEx IPO to raise up to US$400 million, according to press reports.
• Adicon is the third largest independent clinical laboratories (ICL) service provider in China, with an 8.6% market share of the non-COVID-19 testing market in 2021, according to Frost & Sullivan.
• The key elements of the bull case rest on the growing non-COVID-19 testing addressable market, improving market sentiment, strong non-COVID-19 testing growth, stable EBITDA margin and cash generation. 

Ergomed reported FY22 results broadly in line with our expectations. Group revenues grew 22.5% y-o-y to £145.3m, underpinned by sustained demand for both the CRO and PV segments and supported by the ADAMAS acquisition and foreign exchange benefit. Adjusted EBITDA rose 11.5% y-o-y, although margins were comparatively lower (19.5% versus 21.4% in FY21) due to previously flagged incremental investments in technology and senior management hires. The order book remained robust at £295m (up 23.1% over FY21), boding well for medium-term sales potential. Year-end net cash of £19.1m was an improvement over the £12m reported in H122 (after the £24.2m net cash purchase of ADAMAS in February 2022) and, with £80m in undrawn credit facilities, Ergomed remains well-capitalised to fund future growth. We make minor adjustments to our estimates and roll forward our model. We upgrade our valuation slightly to 1,577p/share from 1,573p/share previously.

• Incyte Corporation generated strong financial performance in the last quarter and managed an all-around beat.
• Revenues from the commercialized items in the company’s current portfolio increased by 18% year over year.
• We give Incyte Corporation a ‘Hold’ rating with a revised target price.